I wrote in my last blog about how banking ecosystems can be built around people’s “life moments”. Having children, or relocating, or retiring all are significant events in consumers’ lives, and banks can be more present in them than they currently are.

I also mentioned another kind of ecosystem, one which focuses on a particular kind of banking customer. In particular I spoke about building an ecosystem for SMEs. But the same thinking can be applied to, say, farmers or start-ups.

Our research report, Maximizing Revenue Growth in Retail Banking, mentions several other ecosystem plays that banks are using.

These different approaches can be combined in different ways. There’s no reason to pick only one. Some of these approaches have been used for years and they remain relevant. When I was reading the report, it occurred to me that I don’t really think of these things as “ecosystems”, even though they are. Here are a few examples:

  • Preferential treatment such as price or exclusivity, with vetted merchants, drawing on customer volumes. One example of this is eBucks from FNB. Another one that everybody mentions (with good reason) is Discovery. Anytime a bank gives its top-tier customers access to, say, preferential seating at a sporting event, it is taking this approach.
  • Augmentation of banks’ existing products with those of fintechs for offerings such as lending and personal finance management, to mention just two. There’s a world of “social money” waiting to be explored, where, say, 45-year-old men with two kids in high school can compare (say) their restaurant spending with other 45-year-old men with two kids in high school. There are so many interesting offerings from fintechs that banks can partner with or acquire to create innovative and profitable ecosystems.
  • Value-added service to SMEs through partnerships with third-party providers. We’ve seen this in the software space, where banks have offered accounting software to their business customers.
  • APIs and SDKs for third-party developers to create new services on the bank’s This is a controversial one, because the third-party developer then owns the customer relationship. And any time the bank cedes control of the customer relationship, there needs to be a very good reason. Still, this is a valid approach to building an ecosystem.
  • Aggregation of financial situations at other players through open APIs. There’s nothing stopping a bank from being a third-party developer itself, building a platform using other banks’ open APIs to serve its own customers better.
  • Creative use of physical space to support customer and community needs. This is a new ecosystem play, which I will watch with interest. As banks move their customers online, and with the Covid-19 pandemic shifting customer behaviour away from banking malls and banking head offices, some banks may find themselves holding more real estate than they need. One way of capitalizing on the asset is to use it deliberately, building an ecosystem around it.

I hope this round-up of different ecosystem approaches is thought-provoking. Which ones do you think are non-starters, and which ones do you think have real potential? And do you think we’ve missed any? I’d love to hear your thoughts.